The value at which contracts have been awarded far exceeded 2010's total and has the potential to exceed 2009's. Numerous mega-projects were signed during the third quarter that were balanced across several sectors signifying the strong health of the construction industry. The mixed-use real estate sector accounted for 26 percent of the third quarter's value of awarded contracts while the transportation and industrial sectors accounted for 16 percent and 15 percent, respectively.
The SR95.1 billion in awarded contracts during Q3, 2011 outpaced the value of contracts during the first two quarters combined, which were valued at SR84.2 billion. Q3's value of awarded contracts represents a 104 percent increase over Q3, 2010, while the SR179.5 billion through the first three quarters of 2011 represents a 125 percent increase over the same period last year. The pace at which the value of contracts have been awarded in 2011 strongly resembles the performance of 2009. Compared to the first three quarters of 2009, the value of awarded contracts in 2011 is behind by 2 percent only. However, the value of awarded contracts during Q3 alone represents a 15 percent increase over Q3, 2009.
The NCB report said Construction Contract Index (CCI) peaked at 358.6 points in July after approximately SR69.8 billion in con- tracts were awarded but eased to end the quarter at 316.4 points. The CCI in Q3 grew by 83 percent compared to Q3, 2010's CCI of 172.8 points. The CCI's 358.6 points is the highest level reached since the index was established, surpassing the previous mark of 307.9 points that was set in July 2009.
The distribution of awarded contracts by region confirms that the Eastern Province continues to receive the largest share of mega-projects. Approximately 44 percent of the value of awarded contracts was in the Eastern Province due to heavy investments in the petrochemical, industrial and power sectors. The Makkah region followed with 20 percent share of awarded contracts largely due to the Haramain high-speed railway network's phase two package.
July's value of awarded contracts totaled an astounding SR69.8 billion. Approximately 11 mega-projects were awarded which contributed nearly SR64 billion to July's total. The mixed-use real estate sector led all sectors with a single contract worth approximately SR19.8 billion. The contract was awarded by the Ministry of Interior to Saudi Oger for the construction of a network of 28 security housing compounds across 50 regions in the Kingdom. Most of the construction will be done in the Riyadh region.
The transportation sector had two significant contracts worth approximately SR15 billion. The first contract was awarded by the Saudi Railways Organization (SRO) to a consortium led by Al-Shoula Group in the amount of approximately SR7.5 billion.
The NCB report said second large contract award in the transportation sector was awarded by the General Authority of Civil Aviation (GACA) to three separate contractors, Al-Rajhi Holding Group, Saudi Oger and TAV Airports Holding Company. The SR5.6 billion PPP contract calls for the upgrading and expansion of Prince Mohammed Bin Abdulaziz Airport in Madinah.
The industrial sector had several awarded contracts that totaled approximately SR13.7 billion. Maaden and Alcoa awarded contracts to several contractors in the Eastern Province including three contracts worth SR13.3 billion to Five Solios and Mohammed Al-Mojil Group.
The petrochemical sector had two contracts worth SR11.3 billion awarded by Sadara Chemical Company (joint venture between Saudi Aramco and Dow Chemical Company). One of the contracts was awarded to Fluor in the amount of SR7.5 billion that secured the engineering, procurement, construction and management (EPCM) for the utilities and offsite package.
Within the residential real estate sector, a sizable contract was awarded by Maaden to the Saudi Binladin Group in the approximate amount of SR1.7 billion.
The NCB report said value of awarded contracts in August dipped considerably from July's levels as the mixed-use real estate and education sector combined together to contribute approximately SR6.8 billion of the SR10.4 billion that was awarded. Kingdom Holding Co., in a joint venture with Emaar Properties, awarded Saudi Binladin the contract to construct a mixed-use development in Jeddah covering 5.3 million square meters.
In addition, about SR2.2 billion worth of contracts were awarded in the education sector in August. The Ministry of Higher Education awarded a contract for the construction of medicine faculty buildings at Northern Borders University in Arar for SR1 billion. A second contract was awarded to Mohammed Ali Al-Suwailem Contracting Company in the amount of SR440 million for the implementation of infrastructure works at Hail University. The work is expected to be completed within 3 years.
Saudi Electricity Co. (SEC) awarded two contracts in the power sector worth SR1.2 billion. The first contract was awarded to Middle East Engineering & Development Company (MEEDCO) in the amount of SR578 million as part of SEC's plans to enhance the transmission and distribution of electricity throughout the Kingdom.
The value of awarded contracts jumped to SR15 billion in September, led by the power and commercial real estate sectors. Hajr For Electricity Production Company, a company with SEC as a majority owner and ACWA Power, Samsung Construction & Trading and MENA Infrastructure Fund (GP) Limited as minority owners, awarded two contracts to Samsung Construction & Trading for SR5.3 billion each. The plan calls for the construction of two gas-fired IPP power plants at Qurayyah. Both power plants will have gas and steam turbines, substations and other related facilities.
In the commercial real estate sector, Saudi Aramco awarded a SR2 billion contract to a consortium consisting of Al Muhaidib Contracting Company and the Belgian's Six Construct Limited to build a 60,000 seat football stadium in King Abdullah Sports City in Jeddah.
A sizeable contract in the education sector was awarded by the Ministry of Higher Education to Rakan Trading & Contracting Company in the amount of SR525 million. The contractor will construct a dentistry college, applied medical science college, pharmacy college and a nursing college for male students at Qassim University. Construction is expected to be completed by the third quarter of 2014.
The value of awarded contracts is showing no signs of slowing down as mega-projects continue to be awarded in record numbers, the NCB report said.
